Saudi Arabia’s Non-Oil Activities Show Growth Despite Industrial Production Index Decline
In a continued effort to diversify its economy, Saudi Arabia’s non-oil activities saw a 2.2 percent increase in June compared to the previous month. This growth signals ongoing progress in the Kingdom’s economic diversification goals.
However, the General Authority for Statistics reported a 1.6 percent decrease in the Kingdom’s Industrial Production Index (IPI) in June. This decline is attributed to the agreed-upon oil output reductions by OPEC.
On a year-on-year comparison, the IPI dropped by 4 percent from June last year, reflecting the impact of the production cuts on industrial output.
GASTAT defines the IPI as a key economic indicator that measures changes in the volume of industrial output. It gathers data from industrial production surveys to calculate this index.
The authority also highlighted an 11.3 percent decline in Saudi Arabia’s mining and quarrying activities in June compared to the same period in 2023. This downturn is a result of the Kingdom’s decision to reduce crude oil production as part of the OPEC+ agreement.
With mining and quarrying activities accounting for 61.4 percent of the index weight, the overall trend of the IPI is heavily influenced by this sector. GASTAT emphasized the significance of this sector in shaping the industrial production index.
Despite the decline in mining and quarrying activities, the sub-index for electricity, gas, steam, and air conditioning supply activities increased by 10.2 percent in June compared to the previous year. Water supply, sewerage, and waste management activities also saw a 1.7 percent rise year-on-year in June.
As Saudi Arabia pursues its economic diversification goals outlined in Vision 2030, the mixed performance in June’s industrial production data underscores the challenges of balancing non-oil sector growth with strategic oil production cuts. While non-oil activities show promising growth, the Kingdom’s industrial output remains vulnerable to global oil market dynamics and production agreements.